UniCredit’s CEO Andrea Orcel has a blueprint for Commerzbank: slash costs, strip out management layers and push harder for revenue growth, a formula that has helped transform the Italian lender into one of Europe’s most profitable banks.
Challenges Ahead
The hostile bid has already alienated staff and management, German regulators have said, while European Central Bank supervisors have warned integration will be challenging and prolonged.
Orcel’s plan entails shrinking the Frankfurt-based lender’s cost base by €1.3 billion, a fifth of the total, while keeping it separate from UniCredit’s German unit until 2029 to 2030.
At UniCredit, Orcel inherited a bank already emerging from a five-year restructuring under Jean-Pierre Mustier that lowered annual operating costs to 52% of income, similar to Commerzbank’s current 50%.
Orcel pushed the ratio down a further 18 percentage points, including by taking another €470 million off the annualised cost base, even as revenues soared.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
